The U.S. Commodity Futures Trading Commission (CFTC) announced the launch of “True Fraud Stories,” a video series about how cunning fraudsters lured smart investors into fraudulent investment schemes that resulted in the loss of thousands of dollars of their savings. These real-life victims tell their stories in the hopes that industry members will become educated about financial fraud and avoid similar scams.
In the first part of the CFTC’s series, Bob Bauman recounts what he thought was diligent research, including flying across the country to meet the broker who propositioned him to buy into a lucrative-sounding silver deal to increase his retirement savings. Bauman, a military veteran with an advanced degree in business, was skillfully scammed out of his retirement in a precious metals scheme.
Commonly, these schemes involve fraudulent solicitations and false statements about earnings potential and the safety of investing in metals like platinum, gold and silver, as in Bauman's case.
Despite his research and close examination, Bauman failed to run a quick and easy check using tools available on CFTC’s SmartCheck.gov and had no idea his broker was not registered to sell commodity investments.
When an individual or firm selling investments is registered with federal authorities, they must meet specific customer protection, disclosure and examination requirements. However, although registration suggests some protection, it is no guarantee against fraud or loss caused by market forces.
“It’s a lesson I learned the hard way,” Bauman said in a release from the CFTC. “I hope my story helps other investors avoid a similar situation. In the future, my first-step will be to check the background of any financial professional using the databases on SmartCheck.gov.”
Research has shown that victims of financial fraud are smart, experienced and knowledgeable –yet can become victims of fraud. CFTC’s new video series features these people to help dispel misconceptions and show that fraud can happen to anyone.
“Fraud is a crime. It is not about being greedy or gullible,” said Dan Rutherford, director of CFTC’s Office of Customer Education and Outreach. “The people who commit these crimes are professionals and very good at what they do. Eventually, they get caught, but too often it’s after the money disappears. That’s why we encourage all investors to take the one simple step of checking before investing.”
To view Bauman’s full story, visit SmartCheck.gov/Videos. The series will continue with a two-episode feature titled “The Truth Behind Binary Options Fraud.”